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Canadians cutting back on charitable giving

Canadians cutting back on charitable giving

(Special) – Christmas is a time of giving when people open their pocket books to buy gifts and open their homes to entertain friends and families over the holidays.

Canadians generally have been known to be generous givers to charitable organizations and foundations, but over the last few years giving to charities has been on a decline as the country’s demographic landscape shifts.

A new report by CanadaHelps has found that charitable giving is down across all demographic groups in the country. One-quarter (24.6 per cent) of all Canadians donated to charity in 2006. By 2015 charitable giving had declined to just 20.4 per cent. Over the same time the average annual donation per Canadian decreased to $346 from $368.

“This issue is very complex and there are a whole bunch of reasons why charitable giving in this country is declining while the population is growing,” Marina Glogovac, President and CEO of CanadaHelps, said in an interview. “It’s like a perfect storm of many things which all have come together.”

One major contributing factor is Canada’s shifting demographic. Older Canadians over the age of 55 give the most to charities. Collectively this age group gave $6.4 billion to charities in 2015, almost double the $3.5 billion given by Canadians aged 25 to 54.

Not only do older Canadians give more, they are the only demographic group who have increased their amount of donation dollars — an average of 3.4 per cent per year over the past decade, in sharp contrast to the age 25 to 54 group who have decreased their donations by 2.8 per cent a year.

The gifts made by those currently aged 55+ will soon need to be replaced. Between 2006 and 2015 donation rates by Canadians aged 45 to 54 declined by 6.4 per cent. “It’s safe to say as these Canadians moved into the age 55+ bracket this gap will grow significantly,” the report notes. “This demographic shift creates a widening ‘giving gap.’ It is clear that this is not a sustainable funding model for Canada’s charitable sector.”

Another major issue is competition for donor dollars. There currently are more than 86,000 registered charities in Canada and increasingly donations are being funnelled away through the rise in crowdfunding.

Crowfunding can be defined as the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the internet. In 2015, it’s estimated more than $34 billion was raised worldwide by crowdfunding.

There are other reasons as well.

Many corporations are “going their own way” and setting up their own foundations, people are not increasing their charitable giving in relation to increases in their salaries, and the charity sector of the economy has a perception problem among the public about financial accountability and the impact they make on society, Glogovac says.

Traditionally the top three income groups in Canada ($150,000 – $199,000, $200,000 – $249,000, $250,000+) have given the highest average donation amounts per family but over the last 11 years their average annual donations have decreased (4.2 per cent, 4.9 per cent and 4.9 per cent). The problem is exacerbated by the fact that as income increases families give as much in actual dollars rather than a percentage of their entire income bracket.

Glogovac says the charitable sector, which now accounts for 10 per cent of the full-time Canadian work force, does not do a good enough job explaining the impact it has on society and people and the financial accountability of charities.

“People always are focused on how charities spend their money — it is the most scrutinized aspect of what they do,” Glogovac says. “There is no sector that so significantly impacts the lives of so many Canadians every day. The vitality of this sector is key to a vibrant and sustainable future for generations of Canadians and we hope this report will inform Canadians about charities and the consequences of what they do.”

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.